irhack
Marshwiggle
Senior member
Posts: 477
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« on: December 23, 2011, 10:22:44 AM » |
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Lots of tax threads popping up! Tis the season...
We will owe a lot of taxes this year. We withdrew money from a retirement account (yes, withdrew) to make a down payment on a house. Given we have 30 years until retirement, and according to a recent article I read, still more in our retirement accounts that the average person of retirement age, we felt it was the right thing to do and still do.
However taxes were not withheld from this withdrawal and we know we will owe a lot.
When you owe a lot, and cannot make a lump sum payment, does the IRS let you make payments?
We are actually expecting a windfall in July that will more than cover the amount owed (IRSpouse will be able to cash in some stock at that time) but of course, that's after the deadline.
A related note: how does one find an accountant? I always used turbotax in the past but think it will not be up to the task this year.
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irhack
Marshwiggle
Senior member
Posts: 477
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« Reply #2 on: December 23, 2011, 11:08:41 AM » |
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Some kind of IRA. It was actually bad advice we'd gotten for IRSpouse to roll over his 401K into an IRA when he changed jobs in 2010... he asked the financial person making the recommendation specifically if we use it for a down payment (thinking of taking a loan with no penalties) and their response was "sure! no problem!." Oh well. We should survive.
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irhack
Marshwiggle
Senior member
Posts: 477
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« Reply #3 on: December 23, 2011, 11:12:54 AM » |
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And thanks for the link--phew--I think we can work with this. That's a load off my mind!
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prytania3
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« Reply #4 on: December 23, 2011, 11:27:36 AM » |
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Read this: http://www.bankrate.com/finance/money-guides/irs-rules-for-early-ira-withdrawals-1.aspxAnd, of course, the IRS has payments plans, are you kidding? You can even blow off the payments for a while. At least until they start garnishing your wages and putting liens on your property, which pretty much sucks. Prytania Former Queen of Back Taxes |
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« Last Edit: December 23, 2011, 11:30:01 AM by prytania3 »
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Clowns, I tell you. Clowns.
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octoprof
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« Reply #5 on: December 23, 2011, 11:32:57 AM » |
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When you owe a lot, and cannot make a lump sum payment, does the IRS let you make payments?
My limited experience with the IRS is they really want the money. I hope you can work something out. A related note: how does one find an accountant? I always used turbotax in the past but think it will not be up to the task this year.
Look in your local yellowpages under "certified public accountant." You want a CPA (and certainly NOT a financial advisor). |
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Let us consider that we are all partially insane. It will explain us to each other; it will unriddle many riddles; it will make clear and simple many things... Mark Twain
It is our choices that show what we truly are, far more than our abilities. Professor Dumbledore
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prytania3
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« Reply #6 on: December 23, 2011, 11:38:14 AM » |
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When you owe a lot, and cannot make a lump sum payment, does the IRS let you make payments?
My limited experience with the IRS is they really want the money. I hope you can work something out. A related note: how does one find an accountant? I always used turbotax in the past but think it will not be up to the task this year.
Look in your local yellowpages under "certified public accountant." You want a CPA (and certainly NOT a financial advisor). Yeah, well, I'm the one around here who owed back taxes, and believe me, it is simple as pie to get on a payment plan. |
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Clowns, I tell you. Clowns.
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irhack
Marshwiggle
Senior member
Posts: 477
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« Reply #7 on: December 23, 2011, 11:58:41 AM » |
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Oh, I thought Octoprof was joking, it made me laugh anyway, I mean, yes, they want the money. And we should be able to pay all of it before the end of 2012. So hopefully we can set up a payment plan. Sound like it.
Reading through the IRA link I guess I can see how things might have been confused with the finance guy. But our situation doesn't qualify for any break on the withdrawal penalties. It wasn't our first home.
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notaprof
Not a
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This space for rent
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« Reply #8 on: December 23, 2011, 12:05:56 PM » |
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Oh, I thought Octoprof was joking, it made me laugh anyway, I mean, yes, they want the money. And we should be able to pay all of it before the end of 2012. So hopefully we can set up a payment plan. Sound like it.
Reading through the IRA link I guess I can see how things might have been confused with the finance guy. But our situation doesn't qualify for any break on the withdrawal penalties. It wasn't our first home.
The typo of IRA for the IRS made me laugh. Because of a relative's situation that I assisted with, I can also confirm along with Pry that the IRS allows a payment plan to deal with this situation. The interactions with setting this up were pleasant and respectful and in my relative's case, she told them what she could pay each month and they approved that, even though it would take quite a while for her to pay it off. I think they only get harsh if you avoid them. Good luck. |
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"That's a great deal to make one word mean," Alice said in a thoughtful tone.
"When I make a word do a lot of work like that," said Humpty Dumpty, "I always pay it extra."
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prytania3
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« Reply #9 on: December 23, 2011, 12:15:21 PM » |
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Oh, I thought Octoprof was joking, it made me laugh anyway, I mean, yes, they want the money. And we should be able to pay all of it before the end of 2012. So hopefully we can set up a payment plan. Sound like it.
Reading through the IRA link I guess I can see how things might have been confused with the finance guy. But our situation doesn't qualify for any break on the withdrawal penalties. It wasn't our first home.
It is a first house if you and/or your spouse didn't own a principal residence in the past two years. |
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Clowns, I tell you. Clowns.
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octoprof
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« Reply #10 on: December 23, 2011, 12:37:44 PM » |
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Oh, I thought Octoprof was joking, it made me laugh anyway, I mean, yes, they want the money. And we should be able to pay all of it before the end of 2012. So hopefully we can set up a payment plan. Sound like it.
Reading through the IRA link I guess I can see how things might have been confused with the finance guy. But our situation doesn't qualify for any break on the withdrawal penalties. It wasn't our first home.
The typo of IRA for the IRS made me laugh. Because of a relative's situation that I assisted with, I can also confirm along with Pry that the IRS allows a payment plan to deal with this situation. The interactions with setting this up were pleasant and respectful and in my relative's case, she told them what she could pay each month and they approved that, even though it would take quite a while for her to pay it off. I think they only get harsh if you avoid them. Good luck. Exactly my point. IRS wants the money. If they can't get it out of you immediately, they will get it out of you over time. My best girlfriend, a dentist, had her payroll taxes embezzled by her office manager for several years before anyone figured it out. The IRS was very patient about it since clearly she couldn't immediately pay back that HUGE amount of cash. The IRS and her (newly hired) CPA worked out a plan. |
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Let us consider that we are all partially insane. It will explain us to each other; it will unriddle many riddles; it will make clear and simple many things... Mark Twain
It is our choices that show what we truly are, far more than our abilities. Professor Dumbledore
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tuxedo_cat
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« Reply #11 on: December 23, 2011, 01:19:06 PM » |
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The best accountants I have used in the past were recommended by colleagues -- both also completed my taxes for a *very* reasonable rate (less than what H&R Block was offering, I think).
The one year when I was working freelance and did not make quarterly payments and owed more than I could pay, they put me on a very reasonable monthly payment plan. They also "forgave" a huge chunk of my taxes for that year, which was a shock (I don't imagine they're quite so generous these days). Perhaps I could start a social group on fb of the 10 people in the country who have had thoroughly civilized experiences with the IRS.
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prytania3
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« Reply #12 on: December 23, 2011, 01:33:17 PM » |
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The tax people are entirely nice even though they are tax people. They are very accommodating, however.
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Clowns, I tell you. Clowns.
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southerntransplant
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« Reply #13 on: December 23, 2011, 03:03:38 PM » |
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We were surprised with a massive tax bill two years ago, and worked out a reasonable payment plan. It wasn't a lot of hassle.
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"I tried to walk into a Target, but I missed. I think the entrance to Target should have people splattered all around" - Mitch Hedberg
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scampster
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« Reply #14 on: December 23, 2011, 03:08:34 PM » |
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If you are expecting a windfall in July that will pay off what you owe, maybe you could just file for an extension and pay it all off at once instead of dealing with the payment plan?
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When you are a scientist your opinions and prejudices become facts. Science is like magic that way!
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